Legislation Details

File #: 23-0702   
Type: Ordinance-S Status: Adopted
Meeting Body: City Council Formal Meeting
On agenda: 4/19/2023 Final action: 4/19/2023
Title: Enter into Agreements for Participation in Construction, Operation and Maintenance of Certain Public Facilities to Serve the Proposed Verdin Development and Administration of Verdin Community Facilities District (Ordinance S-49611)
District: District 2

Title

Enter into Agreements for Participation in Construction, Operation and Maintenance of Certain Public Facilities to Serve the Proposed Verdin Development and Administration of Verdin Community Facilities District (Ordinance S-49611)

 

Description

Request to authorize the City Manager, or his designee, to negotiate and enter into a three-party development agreement and inter-governmental agreement (CFD DA), or other agreements as necessary, between the City of Phoenix (City), Taylor Morrison/Arizona, Inc., an Arizona Corporation, and MacEwen Ranch, LLC, an Arizona Limited Liability Company, (collectively, Developer) or its City-approved designee, and the to-be-formed Verdin Community Facilities District (District) outlining the parties’ participation to construct, finance, operate, and maintain certain public water, sewer, roadway, drainage, and trail facilities necessary to serve the Verdin development, and for administration of the District. Further request authorization for the City Treasurer to accept and for the City Controller to disburse funds related to this item.

 

Report

Summary

The Developer submitted an application requesting to form the Verdin CFD. Staff evaluated the application for compliance with state law and consistency with the City’s CFD Policy and recommended City Council proceed with forming the District, per a Resolution. City staff and the Developer have reached general agreement on the major terms and conditions that would govern the District. If authorized by City Council, and subsequently approved by the District Board, the CFD DA would, at a minimum, address the following:

 

  • The Developer, at its sole risk, is to design and construct to City standards, and dedicate to the City all public facilities necessary to serve the Verdin development.
  • The City shall accept ownership of the facilities upon completion to the City’s satisfaction.
  • The District Board shall consist of the Mayor and City Council.
  • The District may retain independent advisors, attorneys, bond counsel, engineers or other professionals at the District’s expense.
  • The District shall be granted bond authorization of $80,000,000. Bonds are to be issued with a term not to exceed 25 years.
  • The Developer shall be reimbursed no more than $72,000,000. To qualify for reimbursement the Developer must, among other considerations, remain in compliance with public procurement rules pursuant to Arizona Revised Statutes (A.R.S.) title 34.
  • The District Board shall have the sole and absolute discretion to issue and/or approve the sale of District bonds or levy District taxes, and the District shall not be obligated to issue or continue to issue any District bonds or levies.
  • District bonds shall be issued in separate series over time when the assessed value of the property within the District is sufficient to support bond debt service given a target tax rate of $3.85 per $100 of net assessed limited property valuation, or at such time as Taylor Morrison provides collateral in amounts and type acceptable to the District Board. For purposes of the foregoing, all property in the District owned by the Developer, or any entity owned and controlled by the Developer, shall be assigned the last certified assessed value such property had when categorized as "vacant" for purposes of net assessed limited property valuation.
  • Expenses incurred to issue bonds shall be included as part of each bond series and repaid with bond proceeds.
  • The City and the District shall have no obligation for costs incurred by the Developer in excess of available bond proceeds after sale, unless otherwise agreed to by the parties prior to any encumbrance. For example, the Developer and City may enter into a separate Water and/or Sewer Repayment Agreement. However, any and all costs that are the subject of a Repayment Agreement are not eligible for reimbursement by the District.
  • The District shall levy up to a $0.30 ad valorum tax for Operation and Maintenance (O&M) costs in accordance with A.R.S. 48-701. If, at any time, the O&M tax revenue is insufficient to cover expenses, including City staff costs for administering District activities, the Developer shall agree to cover the shortfall such that there is no negative fiscal impact on general City operations. The Developer has further agreed to address, in separate development agreements, certain rate revenue shortfalls (e.g. sewer rates) necessary to mitigate negative fiscal impacts on City enterprise operations (e.g. sewer lift station and force mains) associated with serving the Verdin development.

 

Concurrence/Previous Council Action

City Council has approved:

  • General Plan Amendment (GPA-DSTV-1-18-2) and Zoning Amendment (Z-62-18-2) on May 5, 2022.

 

Location

The Verdin Community Facilities District is generally the 473 acres of land on the south side of Sonoran Desert Drive between the 16th and 24th street alignments.

Council District: 2

 

Department

Responsible Department

This item is submitted by Deputy City Manager Alan Stephenson and the Finance, Planning and Development, Street Transportation, Water Services, and Parks and Recreation departments.